Hamilton bleeding affordable housing faster than it can build it

‘We can’t build our way out of this problem,’ housing expert tells council

Thestar.com
March 15, 2023
Teviah Moro

The city hopes a new housing “secretariat” will help dig Hamilton out of its affordability crunch.

But relying solely on new construction won’t do the job, says a housing expert advising the city.

“We can’t build our way out of this problem,” Steve Pomeroy told council in a preview of the city’s new housing “road map.”

Pomeroy, head of Focus Consulting Inc. and a senior research fellow at Carleton University, presented a variety of strategies to counteract Hamilton’s escalated housing prices and spiked rents.

But the cost of new social housing -- at roughly $450,000 per door for deep affordability -- and limited government funds will only take the municipality so far, he suggested.

Rather, the city must be strategic in how it leverages funding from senior levels of government to create more affordable stock while also providing subsidies to help people stay in their homes, he said.

“Our measure of success isn’t how many doors we’ve provided and how many homes we’ve built. It’s how many households we’ve helped.”

Meanwhile, Hamilton is hemorrhaging affordability in the private sector as rents rise, Pomeroy noted.

Since 2011, according to his analysis, the Hamilton census metropolitan area (CMA), which includes Burlington and Grimsby, has lost 15,854 units that rented for below $750 a month, which is considered affordable for a household income of $30,000 a year.

That amounts to a loss of 29 units for every new unit created under various affordable housing initiatives, Pomeroy noted.

“So we’re basically spending a lot of money to go backwards. So the question is: How do we stop the bleeding?”

The answer to help those paying more than they should for rent isn’t building them new homes, he said.

“We basically need to give them help to afford the home they’re already in.”

Giving people that hand-up to make rent or avoid evictions will make for a much quicker fix than spending years to build additional affordable stock, which Pomeroy emphasized, still plays a crucial role.

“But we have to think about it strategically: When do we build, and who do we build it for and who actually needs it?”

For instance, private and non-profit builders could be encouraged to create housing -- but not necessarily deeply affordable -- for international students, a growing contingent in recent years that has competed for the same cheap stock as those in greater need.

On another front, at a cost of roughly 60 to 70 per cent of the cost of construction, the city can help non-profits buy existing rental buildings considered “underperforming assets” by investors who scoop them up and jack rates.

“If you can’t beat them, join them,” Pomeroy said, non-profits can shield those units from market forces and keep the affordable.

In Ontario, no limit is placed on how much landlords can hike rates between tenancies, which critics argue encourages “renovictions” that displace longer-term tenants.

The problem is twofold, suggested Pomeroy, noting shelters end up responding to evicted tenants and their former units become unaffordable at the same time.

Overall, Ontario’s affordability woes have been driven by migration, not enough homes for the new arrivals and low interest rates providing “cheap money,” driving up prices, he said.

But increasing supply alone won’t solve the problem, as emphasized in the province’s More Homes Built Faster Act, also known as Bill 23.

“I fundamentally disagree with that thesis,” Pomeroy said, noting new supply can halt the erosion of affordability, but it “doesn’t necessarily get prices back down again.”

The city’s “road map,” which is to be presented to council in April, is meant to be an “enduring document” that covers the “four pillars”: construction, acquisition, preservation and retention, and housing with supports.

It will include an “action plan” for “quick wins” between now and November, added Angie Burden, general manager of healthy and safe communities.

The “secretariat” is to oversee work on the massive file with programs coming before council each year and worked into city budgets, Burden noted.

That will be an important co-ordinating office, suggested Jim Dunn, a McMaster professor with a focus on housing who’s also helping draft the city’s long-term strategy.

“Without some entity that is looking at all of those interdependencies simultaneously, then you can create these unintended consequences and also fail to take advantage of true opportunities.”

Mayor Andrea Howarth expressed optimism about the emerging long-term housing plan.

“There’s a lot of opportunity that you’ve brought to us today and a lot of creative and innovative solutions to a housing crisis that we can actually start to move on.”